[Management View]
Qorvo's management emphasized a strategic shift away from low-margin Android segments towards high-value markets such as premium smartphones, defense, aerospace, and infrastructure. This transition has improved non-GAAP gross margins and overall profitability. The company is restructuring its Connectivity and Sensors Group (CSG) to focus on automotive, industrial, and enterprise markets, expecting $70 million in annualized operating expense savings by fiscal 2027.

[Outlook]
For fiscal Q3 2026, Qorvo forecasts revenue of $985 million (±$50 million), with a non-GAAP gross margin between 47%-49% and non-GAAP diluted EPS of $1.85 (±$0.20). The company anticipates continued growth in defense, aerospace, and infrastructure markets, while exiting lower-margin Android segments.

[Financial Performance]
Qorvo reported $1.06 billion in revenue for Q2 2026, with a non-GAAP gross margin of 49.7%, a 270 basis point YoY increase. Non-GAAP diluted EPS was $2.20, exceeding prior guidance. The company ended the quarter with $1.1 billion in cash and equivalents and $1.5 billion in long-term debt.

[Q&A Highlights]
Question 1: It seems like you're now assuming a $200 million headwind from exiting the low end of the China Android market. Could you address why that is the case for this year and next year?
Answer: The $200 million decline is more weighted towards the back half of the year and into March due to lower content in flagship brands and the timing of mass-tier models ramping down. These factors are driving the decline.

Question 2: How would you rank order the December outlook across HPA, CSG, and ACG?
Answer: We expect DNA business to increase quarter over quarter, with HPA showing strong growth, up 25% YoY. Infrastructure and broadband businesses are also performing well, with new markets like drones and direct-to-cell satellites contributing to growth.

Question 3: What should we think with regard to March seasonality?
Answer: We are mindful of typical seasonality, with our largest customer ramping down in March and June. The pivot away from lower-margin Android business will be impactful in fiscal Q4, but we are focusing on premium flagship tiers to improve profitability.

Question 4: What are the puts and takes we should think for gross margins next year?
Answer: Business mix, especially growth in HPA and Defense, will be impactful. Factory actions and cost reduction efforts will also contribute to margin improvement.

Question 5: In your guidance, what factors are driving the margin for the December guidance?
Answer: As we ramp down, utilization tends to lead revenue, impacting margins. However, margin performance is substantially improved YoY, and we expect this trend to continue.

Question 6: What is the scale of the aerospace and defense business, and what technologies are driving growth?
Answer: The business is mid-400s in size, with growth driven by new capabilities in drones, electronic warfare, and radar-based platforms. The Golden Dome missile defense system is also a significant opportunity.

Question 7: Are there any merger opportunities or changes expected before the merger is complete?
Answer: We are running separate and independent companies, with latitude for changes, but no specific merger opportunities or changes are planned before the merger is complete.

Question 8: Can you give an update on your progress with your biggest customer on the mid to high band pad?
Answer: We cannot comment on specific customer engagements, but we are proud of the team's execution.

Question 9: Post exiting the lower tier Android, how should we think about your Android and China exposure?
Answer: We are focusing on premium flagship tiers, which require premium performing parts. The strategy is to support Android customers while exiting less attractive areas.

Question 10: Are you seeing any cyclical effects in the HPA business?
Answer: Channel inventory is healthy, with strong bookings and backlog in power management for data centers. We are seeing expedite requests rather than push outs.

[Sentiment Analysis]
Analysts showed interest in Qorvo's strategic shifts and market focus, with questions centered on growth prospects and margin improvements. Management maintained a confident tone, emphasizing strategic execution and cost management.

[Quarterly Comparison]
| Metric | Q2 2026 | Q2 2025 | YoY Change |
|-------------------------|---------|---------|------------|
| Revenue | $1.06B | N/A | N/A |
| Non-GAAP Gross Margin | 49.7% | N/A | +270 bps |
| Non-GAAP Diluted EPS | $2.20 | N/A | N/A |
| Cash and Equivalents | $1.1B | N/A | N/A |
| Long-term Debt | $1.5B | N/A | N/A |

[Risks and Concerns]
Risks include potential impacts from exiting low-margin Android segments and the typical seasonality affecting revenue. The ongoing restructuring and factory transitions also pose execution risks.

[Final Takeaway]
Qorvo's strategic focus on high-value markets and restructuring efforts are driving margin improvements and positioning the company for future growth. The exit from low-margin Android segments and emphasis on premium markets are expected to enhance profitability. Management's disciplined approach to cost management and strategic investments in defense, aerospace, and infrastructure markets are key to sustaining growth momentum.